With the new year under way, it might be a good time to think about your financial goals for 2020.
Whether you’re saving for a particular purchase or event, looking to reduce your debt, or to tidy up your financial portfolio, now is the time to take stock and figure out some manageable milestones.
Review your financial situation
The start of a new year is a good time to sit down and review your current financial situation. With a full overview of your finances, accounts and outgoings, you can get a clear idea of which areas might need some attention.
A simple way to review your assets is to speak to a financial advisor, but you can also review your finances yourself using online tools and your own documentation.
Find out more about how to calculate your net worth and review your finances
Start by reviewing your current financial assets. These might include:
- Bank accounts (primary, ISA, and other)
- Investments (stocks, bonds and similar)
- Business interests (shares and other ownership interests)
- Cash in hand
You should also review any financial liabilities. These may include:
- Car loans
- Bank loans
- Personal loans
- Credit card debt
- Outgoings (rent, bills)
- Any upcoming financial commitments
Once you have established your current financial status, you can then set attainable goals for the coming year.
Goal idea: Wipe the debt slate clean
If you are currently in any debt, such as from a loan or a credit card, setting up an incremental plan with achievable milestones is a good idea for the new year.
The first step is to prioritise your debt and its repayment. The most expensive debt should be tackled first, as it is likely to incur the highest rates of interest.
Calculate the amount you can pay off each month without putting other financial obligations in jeopardy, and consider setting up a direct debit to make things easy.
Goal idea: Consolidate your bank accounts
As your financial needs change, you can sometimes accrue accumulate extra accounts without noticing. By taking stock of your bank accounts, you can easily see which accounts are worth keeping, and which are not serving your current interests. For example, you might have a savings account that no longer has a high rate of interest, or a current account that has been dormant for a long time.
You might also have accounts that you have forgotten about and no longer have the details for. You can check My Lost Account to see if you have any open bank accounts that might benefit from a review.
Gather your account details yourself or speak to a financial advisor for further insight. You can use comparison services to see if your present accounts are the best option for you, or whether you might benefit from switching to another banking provider.
Goal idea: Save efficiently and regularly
As part of your finance review, you could create a dashboard of your financial outgoings to see if you can save money. For example, you can use an app to link your bank accounts and see what outgoings incur the highest costs , speak to a financial advisor, or keep a regularly-updated note of your financial commitments yourself. This will allow you to see where you can cut back on spending, and make a plan for the best place to put your new savings.
Alternatively, you can set up a regular transfer of money from your primary accounts to a savings account, once you have calculated a reasonable amount to save each month. Make sure you consider all your available options to get the savings account that will serve your needs best. You might find it easier to stick to a savings goal if the deposits are made automatically.
If you know you have particular events that might require a larger financial commitment – such as a wedding or holiday – you should factor this into your savings goal. There are apps that can help you save even the spare change from transactions automatically, which will help you to save more efficiently.
Read more about apps that can help you save
Tips on how to stick to your financial goals
Though it might be easy to plan your financial goals, keeping on track can be more difficult when unexpected financial commitments crop up throughout the year.
To help you stick to your financial goals, you could:
- write down your goals and refer to them on a regular basis
- inform others of your goals to keep you accountable
- Talk to partners and loved ones who share financial responsibility with you about savings goals and accounts
- consult a financial advisor for ideas on how to stay on track
- reward yourself periodically for achieving milestones
- create a financial buffer in a savings account to help to mitigate any sudden financial needs
- remind yourself of the things you have to be grateful for that have been enabled by achieving your financial goals.
Get free monetary advice with the Money Advice Service